Summary of Work: Squamous differentiation is a multi-stage process that occurs in many tissues. The molecular link between control of growth arrest and differentiation is being studied. Insight into these mechanisms are important not only for understanding the control of normal differentiation but also the defects in diseases such as squamous metaplasia and cancer. Several different signaling pathways can induce squamous differentiation including those initiated by interferon gamma and phorbol esters. We demonstrated that keratinocytes become growth arrested at specific point in G1 of the cell cycle. This is accompanied by inhibition of Rb phos- phorylation, decrease in cdk activity and induction of the cdk-inhibitors p27, p21 and p16. Although ectopic expression of p21 or p27 causes growth arrest, cells do not differentiate suggesting that additional signals are involved in terminal differentiation. Carcinoma cells are resistant to terminal differentia- tion and changes in growth-regulatory genes and induction of squamous- specific genes were not observed. We have identified and cloned several genes that are regulated during squamous differentiation, including transglutaminase type I (TGase I), cornifin a and b, relaxin and a membrane protein related to PMP22. To study the transcriptional regulation of these genes, we cloned the upstream regulatory region of TGase I, cornifin a and CL20. Footprinting, deletion mutation and mobility shift assays were used to identify important DNA elements. CREB- and AP-1-like sites are being further characterized. We analyzed the ability of a 2.9kb upstream regulatory region (of the TGase I gene) to control the expression of a chloramphenicol acetyltransferase (CAT) reporter gene in vivo and in vitro. Transgenic mice bearing the pTG(- 2.9)CAT construct exhibited the same pattern of tissue-specific expression of CAT as reported for TGase I.